They thought the market would be bad for venture capitalistsbut what about the actual workers behind the tech companies they have backed?
We reluctantly write a summary of layoffs in technology for the third straight week as cuts have again taken place across all phases and sectors. Last month public and private tech companies announced mass layoffs across industries. Section4, Carvana, DataRobot, Mural, Robinhood, On Deck, Thrasio, MainStreet and Netflix employees will be impacted by the downsizing. Some larger companies are implementing hiring freezes, like Twitter and Meta, or announcing a shift in strategy, like Uber.
As was our mantra when we covered the layoffs in the tech industry: Layoffs don’t happen to companies, they happen to people. For US-based tech workers in particular, layoffs don’t just mean a loss of income — they mean a medically dangerous loss of healthcare.
Let’s take a look at which companies have announced cuts this week.
After layoffs hit Netflix’s content arm Tudum a few weeks ago, 150 other mostly US-based employees were laid off, plus 70 more employees in the animation department.
A Netflix representative wrote in an emailed statement, “As we explained on earnings, our slowing revenue growth means we also need to slow our expense growth as a company.” Netflix reported Q1 2022 revenue of 7% $.87 billion and a significant loss of 200,000 subscribers.
Contractors were also affected by these layoffs, but the number of workers affected by that designation is unclear. TechCrunch asked Netflix about reports that employees running various social channels like Strong Black Lead, Golden, Most and Con Todo have been laid off, but Netflix said the company has decided to cut deals with certain agencies it uses to recruit contractors used not to extend. Still, it doesn’t feel good to see queer people and people of color losing their jobs, which has helped Netflix cater to that audience.
Picsart’s unicorn status didn’t save it
Less than a year ago, Picsart raised $130 million from SoftBank, launching the visual creation tools startup into unicorn territory with a valuation of over $1 billion. Picsart, a sleeker, hipper version of Adobe, appears to have taken a downturn, laying off 8% of its employees this week, affecting 90 people. Other SoftBank-backed companies like Cameo, which also became a unicorn last year, have just made layoffs. When last covering Picsart, Alex Wilhelm noted that the company was expected to go public – it still hasn’t, which could be a clue as to what’s going on at the company to trigger such cuts.
Cars24, a used-car marketplace last valued at $3.3 billion by its venture capital investors, shed 600 jobs — or 6% of its entire workforce — this week. The Series G startup had just raised a $400 million round, attributing the reduction to runway lengthening rather than a lack of ability to pay the bills.
As reported by our own Manish Singh, Cars24 is one of many Indian startups that have fired people in recent weeks. Employees from Vedantu, Unacademy, Meesho, OkCredit, Trell, Furlenco and Lido have also cut several roles, he says.
Marketplace startups like Cars24 feel particularly vulnerable in a downturn. Consumer spending habits can become extremely volatile, meaning that demand can decrease while supply remains constant or even increases. Balancing the two sides is the greatest art for any marketplace startup, but predicting revenue stability becomes especially difficult when everyone else is pausing.
Skillz is downsizing the esports biz team
Esports company Skillz laid off 70 employees earlier this week, around 10% of the team, the company confirmed to TechCrunch. No executives were affected by the cuts.
“We have decided to reorganize our resources and investments to increase our profitable growth and further fulfill our vision of building the competitive layer of the Internet,” the company said in an emailed statement. “This realignment has resulted in changes to some of our programs and consequently the people on our team as we prioritize our resources to continue providing a great gaming experience and enable more game developers to bring their creations to life.”
The company’s statement is ironic; To better support its external community, it cuts its internal community. The company says it plans to continue hiring in some areas of the business, but didn’t mention which.